NO FARM INCOME PROBLEM YET

Press, Volume CIX, Issue 32303, 22 May 1970, Page 18

NO FARM INCOME PROBLEM YET

New Zealand farmers did not have ar income problem in the sense that this term was usually used, the head of the farm management department at Lincoln (Professor A D. Stewart) said yesterday.

“Even when we look at our affluent neighbours across the Tasman, we find that 30.000 farmers, or about 15 per cent of the total, are earning an average of less than 31000 from their farms." he told the twentieth Lincoln College Farmers' Conference. “This is a situation which, of course, we must avoid, because we do not have the industrial base to bolster up | a structurally sick agriculture. “But while I cannot speak with authority on the dairy industry where. I am told. 1 an income problem is emerging, it is my experience that [ reasonably efficient farmers I on units which are not too small, and with a reasonable debt load, are earning real incomes which compare with those of persons of comparable status in the community outside agriculture,” he said. Professor Stewart said he was quite prepared to accept the argument that farmers were entitled to interest on their equity capital, provided : they would include the increment in their net worth over I time, as an addition to I income.

"Having said this, let me hasten to add that I do not regard the income situation in farming as satisfactory from the point of view of required growth and adjust ments in the farm sector of I the economy,” he said. ! “There is a clear indication in the stock figures of a major slow-down in the rate of expansion. In Canterbury this year, there is unlikely to be any increase at all. The figures on dry stock indicate that there will not be enough hoggets for significant increases in sheep numbers next year.” Professor Stewart said that reinvestment was the major sufferer when farm revenue declined, and this applied particularly to the retention of stock. Continued buoyancy in meat prices and a favourable season or two could get stock numbers on the move again, but the propensity to expand had .1 declined considerably in the j last two years. “It is this loss of confidence by farmers which 1 find most disturbing,” Professor Stewart said. "A return to the expansion rates of the mid ' 1960 s is going to require [ something much more tanI gible than exhortation." | The theme of this year’s | conference, which drew an attendance of almost 500 farmers, was “Farming ia the 119705.” but the overriding I theme in several papers presented during the day was farm amalgamation. Professor Stewart covered this aspect, saying that in

recent years there bad keen a sharp increase in the cumber of property amalganations. An investigatior of farm sales in the Malvern County indicated that about 60 per cent of transactions in the last three years invdved some form of amalgamation: It was evident that the major motive of amalgamators was to increase the economic viability of their,init as a response to the decline in farming terms of trade “In my view, the famly unit will remain the dominant ownership system in New Zealand farming," Professor I Stewart said. “The bioiogi- | cal nature of farming, and the nature of management in farming, ensures this. Competitive efficiency, or the least cost of production, is attained at a smaller scale than in industry. The separation of the managerial and ownership-financing functions at least in my experience, often leads to disappointing results."